Investor Day Isbergues November 26, Philippe Darmayan Chief Executive Officer Timoteo Di Maulo Incoming Chief Executive Officer

Transcription

1 Investor Day Isbergues November 26, 2014 Philippe Darmayan Chief Executive Officer Timoteo Di Maulo Incoming Chief Executive Officer 0

2 Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about Aperam and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words believe, expect, anticipate, target or similar expressions. Although Aperam s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Aperam s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of Aperam, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forwardlooking information and statements. These risks and uncertainties include those discussed or identified in Aperam s filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier). Aperam undertakes no obligation to publicly update its forward-looking statements or information, whether as a result of new information, future events, or otherwise. 1

3 Improving fundamentals in a challenging environment 2

4 Improving fundamentals in a challenging environment Short term view on the general economic environment remains challenging GDP Growth by region, in % 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% F 2015F 2016F 2017F 2018F Asian growth is forecasted to weaken European and South American growth are currently weaker Brazilian growth estimates lowered during past 6 months Global Asia Europe South America Current economic conditions in Europe and South America remain weak Source: Aperam estimates 3

5 Improving fundamentals in a challenging environment Chinese overinvestment continues to put the stainless steel market under pressure Upstream utilization rate of the Asian industry 75% Worldwide trade flows between Asia and other continents, stainless steel cold-rolled products in kt in % North America 161kt 43kt Europe 148kt 528kt Asia 65% 60% F 2015F South America 99kt Chinese stainless steel production has still been ramping up in 2014 Source: CRU and Aperam estimates 4

6 Improving fundamentals in a challenging environment With the European market having the highest exposure Worldwide trade defense actions Imports market share in Europe (% of the EU-27 market) 30% 25% 20% 15% 10% 5% 0% F Anti-dumping / Imports duties Asia Rest of the World Imports have exceeded 25% of market share and continued to ramp up to become the 2 nd largest market player in EU27 Stainless steel imports in Europe has reached a high record in Q Source: Aperam, Eurofer and SPAS 5

7 Improving fundamentals in a challenging environment Stainless steel demand is improving Stainless steel slab equivalent global demand (in million tonnes) Worldwide stainless steel market breakdown, % Others Pipes & Tubes % 6% Transport Catering & Household appliances F 2015F Developed Developing China 2016F 2017F 2018F 2019F 2% Building & construction Industrial equipment Stainless steel demand growth supported by higher leverage to GDP growth Stainless steel real demand is expected to continue growing at a higher pace than GDP growth Source : CRU and Aperam estimates 6

8 Improving fundamentals in a challenging environment Nickel price strongly influenced by NPI Chinese nickel ore imports from Indonesia & Philippines (in mt) Nickel - LME Cash (USD/t) ,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 NPI Chinese BF* NPI Chinese RKEF* NPI Chinese EAF* Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Jan 11 Apr 11 Jun 11 Sep 11 Dec 11 May 12 Sep 12 Jan 13 May 13 Oct 13 Jan 14 Apr 14 Apr 14 Jun 14 Sep 14 Nov 14 China imports from Indonesia China imports from Philippines Greater conviction on Indonesian ban Higher substitution of Philippines ores over 2014 New NPI cost curve still under evolution Switch of sourcing is putting the evolution of the Chinese competitiveness under question Source: SBB, MB, Macquarie, Aperam * Nickel Pig Iron Blast Furnace Electric Arc Furnace - Rotary Kiln Electric Furnace 7

9 Improving fundamentals in a challenging environment South American fundamentals remain intact Stainless steel flat stainless steel consumption per capita (kg/year) South American Stainless steel demand (in kt) % 0 South America USA Western Europe China F 2015F 2016F 2017F 2018F A developing market with significant potential Expectation of a near flat demand in 2015 Long term growth fundamentals are intact Based upon historically apparent consumption per capita base and a developing market for stainless steel, there is important growth potential in Brazil and South America Sources: CRU & Aperam estimates 8

10 Improving fundamentals in a challenging environment European fundamentals are improving Stainless steel slab equivalent European demand (in million tonnes) European stainless steel market breakdown and evolution 5,5 1 2 % + 1,0% / 2,0% Others 5,0 Pipes & Tubes Catering & Household appliances Transport 4,5 Building & construction Industrial equipment + 1,5% / 2,5% 4, E 2015F 2016F Growth CAGR European demand recovery under way Sources: CRU & Aperam estimates 9

11 Improving fundamentals in a challenging environment Description of the ongoing fair trade European investigation On-going European anti-dumping procedure on stainless steel cold-rolled flat products imports from Chinese & Taiwanese producers 13 May 2014 Eurofer complaint received by the European Commission 26 June 2014 Procedure opened by the European Commission Q1 2015? Decision on potential provisional measures? Q3 2015? Decision on potential definitive measures? On-going European anti-subsidies procedure on stainless steel cold-rolled flat products imports from Chinese producers 14 August 2014 Initiation by Eurofer of the European Commission procedure Q2 2015? Decision on potential provisional measures? Q3 2015? Decision on potential definitive measures? European Commission to examine any unfair market behaviour Source:

12 Aperam Leadership Team 11

13 Aperam Leadership Team Reinforcing the Leadership team* Philippe DARMAYAN Current CEO Timoteo DI MAULO Incoming CEO** Sandeep JALAN Chief Finance Officer Vanisha MITTAL BHATIA Chief Strategy Officer Bernard HALLEMANS Chief Technical Officer Nicolas CHANGEUR Chief Marketing & Sales Officer Stainless & Electrical Steel Services & Solutions Alloys & Specialties Jean-Paul ROUFFIAC COO Europe Frederico Ayres LIMA COO South America Johanna VAN SEVENANT CEO Services & Solutions Frederic MATTEI CEO Alloys & Specialties A talented and dynamic team dedicated to the enhancement of Aperam s core strategy * As from 1 December 2014 ** Until 31 December 2014,Timoteo Di Maulo is the Chief Commercial and Sourcing Officer and assumes the interim for Sustainability, HR and Communication until such responsible is appointed 12

14 Aperam is well-positioned to seize stainless opportunities 13

15 Aperam is well-positioned to seize stainless opportunities Health and Safety performance Lost time injury frequency rate (LTIF)* Significant improvement in injury frequency reflects group-wide focus on safety. Zero fatality in 2013 and YTD The Group s focus is now on to rise the bar in terms of fair play policy application, to improve safety behaviors and accountability of our leaders and employees (contractors included). Ultimate objective remains zero harm M 2014 Safety of our employees remains our first priority *LTIF = Lost time injury frequency defined as lost time injuries per worked hours; based on own personnel and contractors 14

16 Aperam is well-positioned to seize stainless opportunities Solid and diversified sources of profitability Aperam sales breakdown by destination (H1 2014) Aperam EBITDA breakdown (YTD ) Asia & Africa 6% USA 5% Alloys & Specialties 11% Brazil & Latin America 25% Services & Solutions 16% Stainless & Electrical Steel - Europe 37% Europe 64% Stainless & Electrical Steel - Brazil 36% A healthy recovery of Aperam European margins has been realized with solid performance Source: Aperam 15

17 Aperam is well-positioned to seize stainless opportunities Aperam s main markets have good perspective in terms of supply/demand balance 6 North America 85% 6 Europe 85% % 4 75% % 2 65% E 2015F 2016F 2017F 2018F 55% E 2015F 2016F 2017F 2018F 55% 6 South America 85% 20 Asia 85% % 15 75% % 5 65% E 2015F 2016F 2017F 2018F 55% E 2015F 2016F 2017F 2018F 55% stainless steel slab equivalent demand, mt - LHS Equivalent slab capacity utilization rate, % - RHS Utilization rate perspectives in both Europe and South America are close to 85% with solid demand outlook Source: CRU & Aperam 16

18 Aperam is well-positioned to seize stainless opportunities European restructuration and productivity enhancement Aperam downstream rationalization in EU from 29 tools to 17 tools European best in class R&D centers in Imphy and Isbergues to support operational excellence GENK ISBERGUES GUEUGNON HA&P lines CR mills HAP 3 CR 4 CR 2 CR 3 CR 1 HAP 3 CR 2 RD 79 CR 2 CR 3 CR 4 CR 5 CR 6 Cost improvement Supporting productivity increase through innovation on industrial processes CA&P/ BA lines CAP 1 CAP2 BAL Skins Skin 2 Skin 3 Skin 1 LC2I CAP 2 Skin CAP10 BA 6 BA 8 Skin 2 BA 11 Skin 3 Skin 1 Debottlenecking Increasing yield and lowering reprocess to debottleneck strategic tools Core Markets Capital goods, chemicals & energy Auto, distribution & 1 st transformation Decoration trim, heat exchanges & white goods Product mix Develop new products, new solutions and innovative services Long term suspension Mothballing & Swing Combination of RD7 and HAP9 and investment On-going investments focused on productivity improvement Aperam European restructuring completed in 2011/12 Ongoing R&D initiatives to further improve competitivity, debottlenecking and innovation An early restructuring enables Aperam to reach record volumes in Europe since 2008 with lower number of tools. Aperam is well positioned in the core markets in Europe, with 85-90% loading of its most efficient assets. 17

19 Aperam is well-positioned to seize stainless opportunities Unique asset base perfectly adapted to the South American market Stainless steel and Electrical Steel demand in Brazil, kt Aperam s assets optimisation in South Amercia Product mix Timoteo meltshop 900kt capacity Stainless steel Electrical steel Non grain oriented Grain oriented High grain oriented * Special carbon Geographical mix Export to Americas Brazilian penetration Tariff protection Domestic premium E 2015F 2016F 2017F 2018F 2019F Stainless steel Electrical Steel Brazilian asset running at optimal utilisation rate with the current demand Projects on-going to debottleneck the cold rolling operations Upgrade of the Grain Oriented products with the development of HGO Continuous margin optimization between products mix and deliveries in South America Optimizing Brazilian operations and sales to capture South American market value Sources: CRU & Aperam estimates * Under development 18

20 Aperam is well-positioned to seize stainless opportunities Aperam Top Line strategy Commercial & Marketing environment Current positioning Future positioning Markets Distribution channels Aperam positioning Competition Raw materials Aperam strategy Volume / Channels / Customers Prices Contracts/Spot Mix Innovation levers Securing & Raising competitiveness against other materials Breakthroughs : new application opportunities Aperam Innovation plan Market segment A B C D Penetration potential for stainless steel Guidelines & Resources Strengthening product and service differentiation 19

21 Aperam: value accretion beyond stainless production 20

22 Services & Solutions Strategic pillars of the Services & Solutions 1 1 Develop customers loyalty thanks to a best-in-class service 12 Reduce Aperam s exposure to imports 1 3 Support continuous activity for the mills 1 4 Capture additional value in the downstream operations Being a key partner for the stainless steel customers by offering downstream added value services 21

23 Services & Solutions Develop customers loyalty thanks to a best-in-class service Example of the stainless steel welded tubes market for automotive Agility Aperam Usti factory fully operational in 2006 Unique stainless steel tube manufacturer in Eastern Europe Automotive clients assisted in their implementation in Eastern Europe Reactivity Just-in-time deliveries Close to customer to support their operational and inventories optimisation Flexibility Taylored service delivered across Europe Welding HF and Laser, cutting to length, Perforating, Bending, End-forming Customers location Recent customers plants (<10 years) Aperam stainless welded tubes plant (Czech Republic) Aperam is among the top 2 leading players in the automotive stainless steel welded tubes market Aperam assists its clients continuously through their development and transformation projects 22

24 Services & Solutions Reduce Aperam s exposure to imports European market structure stainless steel CR & HR Services & Solutions yearly shipments, 000 tonnes Direct Sales Europe Mills Tubes, 1st Transf, Precision End Market Integrated Distribution Imports. Independent distribution & Stockists Current import volume Max. Volume exposed to import competition M 2013 annualised 9M 2014 annualised Services & Solutions division supports Aperam resilience against imports pressure Source: Aperam 23

25 Q Services & Solutions Support continuous activity for the mills Stocks of flat stainless steel in EU-27 for distribution, 000 tonnes Services & Solutions quarterly shipments, 000 tonnes Services & Solutions ensures a minimum level of shipments for the mills, reducing volatility Jan 2008 Apr 2008 Jul 2008 Oct 2008 Jan 2009 Apr 2009 Jul 2009 Oct 2009 Jan 2010 Apr 2010 Jul 2010 Oct 2010 Jan 2011 Apr 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014 Apr 2014 Jul Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Eurofer, Aperam

26 Services & Solutions Capture additional value in the downstream operations EBITDA margin of Services & Solutions, USD/t Cumulated (Adj. EBITDA Capex), USDm M M 2014 EBITDA margin, LHS Nickel price, RHS Adj. EBITDA always positive despite the nickel price pressure More than 60 USD/t of contribution since 2007 Contribution from Leadership Journey and Top Line strategy Positive operational cash flow generation 49 USDm of operational cash contribution since the spin-off State of the art asset with adequate maintenance program Continuous positive contribution of the Services & Solutions division 25

27 Alloys & Specialties Leverage our unique presence in Alloys & Specialties 11 A leading position in nickel alloys 12 An attractive niche market with high entry barriers 13 Aperam s unique strengths in the wire rod and strips niches 14 Improving competitiveness to follow the market growth A solid player in highly stable and valued business 26

28 Alloys & Specialties A leading position in nickel alloys Aperam Alloys & Specialties geographical footprint Global nickel alloys producers (kt) Amilly Rescal Imhua Wire drawing The magnetic parts company 40 nn n Transformation workshop n n Imphy ICS (JV) Daido Sumitomo Hitachi Haynes Nippon Yakin Carpenter Aperam A&S TK VDM Allegheny Special Metals 0 Meltshop, wire mill, cold rolling, bars, R&D Diversification into industrial clads World #4 in nickel alloys, the largest on Wire Rods Source: SRM, Aperam 27

29 Alloys & Specialties An attractive niche market Nickel alloys demand worldwide, kt Main applications % AUTO E&E POWER GENERATION Turbochargers, valves Auto Gearbox CVT belts Spark plugs Sensors Cookware Resistance, thermocouple Electrical safety Shielding Gas turbines Nuclear OIL & GAS Seamless tubes LNG tanks Welding wire rod Christmas trees, Kellies E 2015F 2016F AERO PROCESS & GENERAL INDUSTRIES Engines Flaps, nozzles Fasteners Landing gears Heat exchanger, boiler Shaft mixers & equipment Vessels, plates, welded tube Solid growth prospects in Alloys end-markets Source: SMR, Aperam 28

30 Alloys & Specialties Macro markets provide trends, but each specific market has its own dynamics and prospects Alloys / Alloys family Superalloys, controlled thermal expansion alloys, maraging grades, heat resistance Price, cost and margin of some key products, USD/kg RELEVANT MARKET Application / technology Product Forms Turbos, CVT belt, LNG containment, injectors, pipe cladding, thermocouple, Electrical furnace, aircraft landing gears, aircraft engine parts Relevant markets have often limited size and require specific metallurgic know how and understanding Product 1 Product 2 Product 3 Product 4 Margin Direct Costs Raw Materials Profitability is often related to the metallurgic and manufacturing complexity of each grade, to the «relevant market» size and to the competitors involved Market growth is more relevant in terms of value and margin than volume Source: Aperam 2013 Note: LNG = Liquefied natural gas CVT = Continuously variable transmission 29

31 Alloys & Specialties Aperam unique strengths in Nickel Alloys Wire rod cost cust curve, direct costs* Key success factors of Aperam on Strips Supply Chain Quality & Certification R&D support Track record of 100% on-time delivery on its core-segment Among the best lead time of the industry Certified supplier on Invar technologies Delivering very high standard of metallurgy, ultra clean surface and very low defect rate Qualified for automotive mandatory certification Continuous R&D with customer to pre-empt market demand Dedicated workshop deployed on its coresegment Imphy s state of the art assets and production process make Aperam very competitive on the wire rod segment Aperam is the n 1 on LNG and CVT markets A&S as a leading global player on wire rods and strips Source: Aperam internal analysis * Excluding indirect costs and SG&A Note: LNG = Liquified Natural Gas ; CVT = Continuously Variable Transmission 30

32 Alloys & Specialties Improving competitiveness and quality to follow the market growth Gains from past investments on the upstream enhancement On-going investment on downstream debottlenecking One additional induction furnace with secondary metallurgy to : Debottleneck current asset and follow the increasing needs for high purity alloys Increase flexibility and responsiveness to customers needs Optimize working capital by decreasing inventory Optimize raw material costs : yield loss reduction, recycling of discounted material and internal scraps Access to continuous caster for billets Two additional remelting furnaces to : Address strategic dependency Reverse outsourced operations Increase sales of re-melted products with high margin to follow top line growth strategy Debottlenecking of the finishing line of the Imphy Wire Rod mill through automation and upgrade of its assets to: 1. Reduce costs base of the current operations 2. Decrease working capital and improve leadtime 3. Increase flexibility to better serve our customers Aperam is willing to strengthen its Leadership on its core niches Leadership Journey gains to result from major investment program and operational improvements 31

33 Alloys & Specialties A solid player in a highly valued business Ebitda margin Aperam A&S versus alloys peers, % EV/Ebitda (median) of the alloys peers through the cycle 14% 12% 10% 8% % 4 4% 2% 2 0% M Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Aperam A&S Alloys competition Aperam A&S has become one of the most profitable players in the alloys & specialties market 32

34 Strategic outlook 33

35 Strategic outlook Agility to remain resilient to challenging environment while capturing new opportunities 1. Cost 1 1 Leadership Journey Further enhance competitiveness and operational flexibility 2. Margin 2 1 Top line strategy and innovation 3. Cash 1 3 Cash focus & Stronger Balance Sheet 4. Niche growth 4 1 Growing in the alloys business Robust strategy with significant upsides 34

36 Q&A 35